For venture capital-backed companies, scaling quickly and efficiently helps maintain a competitive edge and meet investors’ expectations. Expanding into new markets and hiring top talent from around the world are often key growth strategies for VC-backed businesses. That’s because hiring a global team can also be more cost-effective and help reduce operating expenses, which is especially important for early-stage and scaling startups.
However, navigating the complexities of international employment can be daunting to founders who are already juggling, well, everything else. That’s why partnering with a global Employer of Record (EOR) can be a game-changer for your clients.
What is an Employer of Record (EOR)?
An Employer of Record (EOR) is a third-party organization that takes on the legal responsibilities and administrative tasks of employing workers on behalf of a client company. Essentially, the EOR becomes the legal employer, takes on all compliance risks, and handles human resources tasks, while the client company maintains control over the employees’ day-to-day tasks and responsibilities.
Global Hiring Expands Opportunities
A company might explore international hiring because they’re struggling to find local talent to fill open positions. In fact, 58% of SMB owners say they’re turning to global hiring because of a shortage of available U.S. employees with the skills they need. International hiring is also a good way for SMBs to manage the bottom line, with 86% of SMB owners reporting they’re looking to global talent to help cut costs.
The reverse is also true, as a large percentage of international companies are hiring American workers. According to the U.S. Commerce Department’s Bureau of Economic Analysis, three out of every 10 U.S. employees were employed by a multinational company in 2020. But now it’s not just large international firms scooping up U.S. talent. Businesses both big and small are hiring remote U.S. workers.
Employers of Record Simplify International Hiring
Businesses often need to open a separate legal entity to operate in another country. This can be a lengthy and costly process, sometimes taking up to a year. For VC-backed companies, speed is of the essence. Employer of Record services help businesses quickly establish a presence in new markets without setting up a local entity. This means that companies can start hiring and operating in a new country within weeks, rather than months or years, accessing the talent needed for growth quickly.
Global EOR services allow companies to accelerate global expansion by easily building international teams. This allows organizations to concentrate on core business operations, developing business strategies, and implementing go-to-market plans instead of getting bogged down in the logistics of operating in another country.
Partnering with an EOR helps your clients:
- Gain access to a global talent pool: An EOR partner enables companies to tap into a diverse global talent pool. With the ability to hire employees in over 180 countries, companies can attract and hire the best talent — regardless of location. This is especially important for tech startups and other innovation-driven companies that rely on highly skilled professionals. An EOR can help streamline the hiring process and help companies remain competitive in the global talent market.
- Ensure global employment compliance: Navigating another country’s complex web of local laws and labor regulations can be challenging and time-consuming, especially for growing startups. EORs have expert knowledge of local employment laws and guarantee compliance with all legal requirements. This includes handling employment contracts, tax filings, benefits administration, and more. EORs also help avoid contractor misclassification and any potential fines and penalties.
- Avoid permanent establishment: One potential issue companies face when hiring in another country is the risk of permanent establishment (PE). If the other country’s government classifies a business as a PE, it can lead to serious tax liabilities and associated financial penalties. Partnering with an EOR prevents PE risk since the EOR manages all associated company operations and employee management.
- Oversee HR functions: Most companies aren’t experts at hiring international employees. Employers of Record are. An EOR can provide onboarding for new hires, ensure employment contracts with employees or contractors are compliant, manage global payroll processing and payroll taxes, administer any employee benefits, such as health insurance, and more. EORs can also assist with background checks and visa applications.
- Manage expenses: When companies utilize an EOR for global expansion, they save money on operational costs and hire the talent they need when they need them. Companies also have the ability to hire independent contractors through an EOR, giving your clients even more hiring flexibility and helping cut costs.
Partnering with an Employer of Record like Remofirst can offer significant advantages for VC-backed companies looking to expand globally and hire top talent. By leveraging our expertise and infrastructure, companies can accelerate their growth and reduce risk.
Referring your clients to Remofirst will allow them to scale with their business needs. By partnering with an EOR, your portfolio companies can find and hire the global workforce they need, including full-time employees or contractors. You’ll create more value for your clients by referring them to us and have peace of mind knowing your customers are in good hands.
